Arizona Food Stamps and Unemployment Scammers Slapped With $2.1 Million in Fines

Arizona's Department of Economic Security is to be repaid $2.1 million by people caught gaming the food stamps and unemployment insurance programs.

The agency's investigative units, with help from law enforcement, found 87 people in the last year who abused the Supplemental Nutrition Assistance Program (SNAP), along with 122 people who defrauded the Arizona Unemployment Insurance Program.

According to a DES spokeswoman, those 87 participants in SNAP got a ban from the program for at least a year -- including four people who got lifetime bans -- and have been ordered to repay more than $1.02 million in restitution.

Back in 2012, DES payed out nearly $1.7 billion in SNAP benefits, so these fraudulent payments account for a tiny fraction of the program's cost.

In the unemployment insurance program, those 122 people were criminally prosecuted and convicted. According to DES, seven of those people have been sentenced to jail time, and 71 have been placed on probation.

Restitution and other fines from unemployment insurance fraud total more than $1.12 million.

Arizona's state auditor recently took a look at how DES identifies fraud in welfare programs, and although the auditor reported that the procedures are generally good, the auditor did find a few loopholes.

For example, auditors matched 13,920 names of state prison inmates with information matching people participating in the Temporary Assistance for Needy Families (TANF) or SNAP programs. Auditors took a closer look at 25 of those cases, and found that three of the people may have received payments while in prison.

"One participant received benefits for 48 days totaling $200 during incarceration at the DOC, and the Division stopped the participant's benefits when it received notification of an active warrant for the participant from the Department of Economic Security's Office of Special Investigations," the report stated. "However, the Division did not attempt to recover the overpayments."

In another sample, auditors decided to look at 60 cases where it appeared that payments may have been authorized after a person's death. They were able to verify that 11 people had received payments after their death, and nearly $1,000 was actually spent from the Electronic Benefit Transfer (EBT) cards in seven of those cases.

In the other 49 cases examined, no inappropriate payments were made. In the cases where extra payments were made, they didn't last for long, as the dead person couldn't renew their enrollment.

Additionally, the auditor found that about $43,000 of TANF money was spent at "what appeared to be liquor stores." A 2012 federal law prevents any TANF transactions to take place at liquor stores, casinos, gaming establishments, or a place that provides "adult-oriented entertainment." Auditors found no instances of money being spent at the other banned businesses.